Senate Republicans Craft Auto Insurance Strategy

The lines are being drawn in the legislative sand over auto insurance reform and what should be done to clear up the questions remaining with the demise of the controversial CAT Fund.

Senate Republicans yesterday, in outlining their legislative priorities for the upcoming two-year session, said finding ways to stop spiraling auto insurance costs will be one of the first issues to be tackled this year.

Sen. Edwin Holl, R-24th District, chairman of the Senate Banking and Insurance Committee, said he expects the committee will meet on Jan. 23 to report out a package of bills that he said - among other things - will reduce auto insurance fraud, heavily fine uninsured motorists, bar the cancellation of policies in certain areas and eliminate costly duplicate medical insurance coverage for vehicle owners.

But Holl drew the line at consideration of a comprehensive auto insurance reform package such as the one offered last year by Democratic Gov. Robert P. Casey and said he would not deal with any plan to limit claims by establishing a threshold, or minimum medical expense, that could be incurred before a lawsuit could be filed.

Casey's insurance reform package, introduced last January but never enacted, would have established thresholds similar to limits placed in the state's former no-fault insurance system. And yesterday, Rep. William Rybak, D-135th District, chairman of the House Insurance Committee, said an auto insurance reform package he is developing with the administration would deal with thresholds in some manner.

"To use a threshold in this package could very well destroy the entire effort," Holl told reporters during a Capitol news conference. "It is a very controversial item. There is a serious question of constitutional ity."

Anyone who would insist on thresholds, he said, "would be asking to continue the problems we now have in the crisis."

Neither Rybak nor spokesmen for the Casey administration would discuss the upcoming Democratic proposals in any detail.

Except for mentioning that thresholds will likely be part of any plan he offers, Rybak would only say he is negotiating with the administration and members of the House Insurance Committee to develop a bipartisan legislative proposal that would address the myriad issues involved in changing auto insurance.

"I steadfastly refuse to use the Band-Aid approach," Rybak said, adding that states that have addressed auto insurance reform in a piecemeal fashion "still have the problem of excessive rates and sticky availability."

Both Holl and Rybak said they are waiting for Casey to come out with proposals to deal with the demise of the Catastrophic Loss Trust Fund, the state-mandated insurance program that provided between $100,000 and $1 million in medical and rehabilitative funds for victims of serious automobile accidents.

Casey signed legislation in December killing the controversial fund but said the Legislature needs to act quickly to establish procedures and policies for continued funding for people who either already are getting benefits or have filed notices that they soon will file for them.

The one-sentence bill the governor signed made no provision for a transition period for the fund. Holl said Casey could have signed Senate- passed legislation providing for "an orderly transition." Casey, Holl said, "threw a brick through a plate glass window" when he signed the bill.

As of last Nov. 30, 889 people were receiving CAT Fund benefits, Insurance Department spokeswoman Amy Dugan said yesterday, with 1,500 others filing notices they expected to cross the $100,000 medical expense limit soon. By that date, she said, the fund had paid out $97.8 million.

At issue is not continuing to provide benefits to claimants, but how much money it will take to fill the claims and what will be done to raise the money needed to pay them.

Holl has said the state will need much less than the $270 million in unfunded liability the fund's actuaries have estimated will be needed to support the claims.